Quick Overview: Bipartisan Housing Finance Reform Act

House Financial Services Committee Chairman Jeb Hensarling, R-Texas and John Delaney, D-Maryland are working together to pass a bipartisan effort to reform the financial infrastructure. If the BipartisanHousing Finance Reform Act passes Congress, it will have a tremendous effect on the whole mortgage industry since it provides for sweeping changes.

Quick Provisions of the Bipartisan Housing Finance Reform Act

“Our discussion draft, which we will unveil later today, will repeal the GSEs’ charters, permanently ending their monopoly, and transition to a system that allows qualified mortgages backed by an approved private credit enhancer with regulated, diversified capital resources to access the explicit, full government securitization guarantee provided by Ginnie Mae. I believe the plan will preserve much of what is demanded in the current system: liquidity, the TBA market, and the 30-year pre-payable fixed mortgage. And it will do so while dispersing risk and leveling the playing field for all entrants into mortgage finance.” – Rep. Hensarling

Here are some of the quick provisions of the Bipartisan Housing Finance Reform Act:

Separating Ginnie Mae from the Department of Housing and Urban Development, therefore making it the primary government backer of all mortgages.

Ginnie Mae to create a program called “Ginnie Mae Plus,” which would “provide borrowers access to conventional home loans by guaranteeing payment to investors of securities backed by eligible conventional mortgages and protected with private capital.”

Eliminate the 3% down mortgage programs of Fannie Mae and Freddie Mac. It will now require borrowers to put down at least 5% to get a government-backed mortgage.

FHFA would be directed to take the GSEs into receivership to begin winding down their legacy business.

Establish a new “non-government, not-for-profit Mortgage Security Market Exchange”. This exchange will develop “best practices” standards for the private securitizing, pooling, and servicing of mortgages. Also, it will also be operating a “publicly accessible securitization outlet to match loan originators with investors.”

WIll the Bipartisan Housing Finance Reform Act help the Mortgage Industry?

Can the new bill help the mortgage industry? Moreover, will it provide more housing opportunity for Americans and a more stable business for realtors?

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